A mid uncertainty on cotton export and anticipation of further price rise, textile majors are thinking of doing all or the bulk of their procurement during the initial part of the season.
The Indian cotton year, which runs from October to September, begins today. Companies say they would prefer not to procure on a month-to-month basis. R K Dalmia, president of Century Textiles and Industries, part of the B K Birla group, told Business Standard, “We will buy cotton in the first few months only, as prices are likely to go further up and there are concerns on quality of the crop.”
Industry leaders at the recent annual general meeting of Confederation of Indian Textile Industry said mills had no cotton stocks. There are also reports that quality has suffered due to excessive rain in Punjab and Haryana.
According to Sunil Khandelwal, chief financial officer of Alok Industries, "Globally, there are supply constraints as the crop in China and Pakistan has suffered. Prices in the domestic market move with the international prices, which are rising.” Alok would, he said, finish cotton procurement for the main season during November-February.
The CFO of Arvind Ltd, chose not to disclose the buying plan but said, "There is a general caution on cotton prices presently."
Normally, the new crop starts arriving by the first week of October. This year, say industry players, arrival would get delayed by a month. “We expect cotton arrival this year to be around the last week of October or first week of November,” said Dalmia.The price of the Shankar-6 variety is Rs 38,000 a candy (a candy is 356 kg). The country is expecting an over all production of 29.2 million bales against 29 million bales last year.
